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Friday, 31 July 2015

Intra-day volatility in the stock indices is very high. Lots of action. Although increased volatility can be more difficult, what I do is to ficus on outside in trades - fade the fast moves. This gives lots of trades every session.

The downside of this approach is that when the market goes into trend day mode - and it can switch part way during a session - I need to only fade the moves opposite to the trend, trading only those that pullback enough. Trading shallow pullbacks means it takes longer to discover I am wrong - bigger risk and the balance between risk and reward may not meet my standards.

Tuesday, 21 July 2015

Gershwin's "Summertime" is a great song. This recording by Billie Holiday is a wonderful example.

Summertime is well and truly here but it brings lots of opportunities. One thing that happens when the markets gets quieter is that I may have to reduce the size of the bars I trade and make my entries more aggressive. I just get the trade on ad then decide whether I want to keep it or not. Trade location is even more important than usual when its quieter. Having a good trade location means that I can usually scratch a trade if I think I'm wrong.

Monday, 22 June 2015

Its groundhog day most days in the markets. I have my trading pictures and when they appear in the live markets and are confirmed by order flow I just have to pull the trigger. Selling that blue line resistance was revealed by MP. There was a double resistance here - the blue line and the VAH of that distribution. It was the order flow that showed me which one to sell.

I'm just finishing tidying up all the typos in the book so if you want to follow my methodology you will have a roadmap.

Wednesday, 17 June 2015

The book will be posted to the blog by the end of the month - June 2015. And it is free. Look for a tab at the top - BOOK. I am still having some Amazon issues but it will be published there as soon as those issues are resolved. The upside to having the book in the blog is that you can ask questions and also translate it into other languages.

The chart below is today's ES. Very typical use of my methodology. You can see that the MPs have been split and the resulting resistance revealed. The arrow shows the sell short point based on that resistance and triggered by the order flow - top of zipper and VAL of distribution.

There are trades like this in most markets and the techniques I have been using well before this blog started are still working well. Adding the raw order flow component has just made them better.

Thursday, 28 May 2015

There is a great misunderstanding about order flow and context. I see this from both emails and people I am mentoring. This misunderstanding can be corrected by looking at markets in a different way.

I have repeatedly espoused that CONTEXT RULES. I have also said that order flow needs to be read in context. For example, strong buying can be initiative action that will continue or it can be stops being hit at the end of an up move. To distinguish between the two, I need to see the context. Context is made up of Market Profile and indicators that tell me where I am in context. Indicators no longer trigger trades. Order flow triggers trades. Indicators tell me trend and its strength, where the mean is and how far I am from that mean.

An analogy to this is tennis. We have a tennis court with a net and lines. That is our context. As a player we watch where our opponent hits the ball in that context and how hard. We look at where he hits it from.

I draw your attention to the lows of the open on 5/22/2015. The previous day's Profile was split to reveal the VAL support that held on the open. Then look across to the order flow chart. The price bounced off the support on the open and then pulled back to provide the entry opportunity. From there it was just profit.

Wednesday, 13 May 2015

The correct splitting of the Profile showed this resistance. It was not visible before the split. I know there are lots of support and resistance areas on a chart so which one will "work". That's an easy question to answer: "the one where the order flow reverses".

Support and resistance areas are decision points. Order flow makes the decision.

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About the Electronic Local

I have written this day trading blog since October 2009 when I started teach one of my daughters how to trade. I have recently released an eBook: Trading Order Flow in a Market Profile Context that shows my trading methodology using the latest technology. The technology is still evolving and I will evolve with it. I will show what is possible to do as a discretionary trader with recordings of live trades on my ElectronicLocal YouTube channel.

I have enough money to last me the rest of my life unless i buy something - Rodney Dangerfield

I'm teaching my youngest daughter to trade. She's a 25-year old IT professional who came to me a couple of months ago and said, "Dad, I want to learn to trade. I’m tired of working so hard making other people lots of money. Do you think I can do what you do?".

I've been a successful trader for over 30 years, yet I’ve always discouraged my kids from becoming traders. It's a hard way to make a consistent living unless you have strong discipline and focus. Then I thought, she has a career to fall back on if she doesn’t succeed, which often happens. Plus she was very insistent, (a good trait for a trader) so I said OK.

Was this a weak moment of a dad being wrapped around a daughter's finger?

Will I fail?

Will she fail?

So this blog will be our trading journey and journal. The good, bad and everything in between.

I'll start by posting a huge amount of trading and background information. So if you're following this blog start with the oldest posts.

As things get moving, I'll be adding questions, answers and comments. Twitter will provide Tweets of trading information and I'll even try videos to get the difficult trading concepts and ideas across.

We should end up with an all in one reference and "how to" of my trading methodology.

Tom

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CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

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